ABSTRACT
The life cycle costs, C, are calculated by the well known net present value equation:
C = N∑
Ct (1 + r)t
where N = number of years in the calculation, Ct = cost over a specified period of time t (years), and r = discount rate. Some of the costs over a specified period of time are for example the initial cost, maintenance costs, user costs and demolition costs. For real discount rates Tupamäki has suggested the following values for different kinds of purposes: natural economy 0%, national economy 3%, state economy 6% and in business economy 9%. In Finnra’s LCC calculations, the discount rate has normally been 4 or 5%. In this study the average discount rate is primarily estimated at 4%.
